SF Chronicle joined NY Times in false assertion that pro-Obama group allows supporters to break legal contribution limits

An August 8 San Francisco Chroniclearticle by staff writer Lance Williams on Vote Hope -- a political action committee (PAC) that says it "intend[s] to deliver California for Barack Obama" in the 2008 Democratic presidential primary, and an unaffiliated "527 group" -- claimed that Vote Hope "rake[s] in donations in excess of what is allowed under tough federal campaign finance laws." The article's headline asserted "Obama's supporters get around money limit." As Media Matters for Americanoted after a New York Times article raised the question "Have some of Senator Barack Obama's supporters figured out how to give more than the $2,300 legal maximum to back their candidate?" both the Vote Hope PAC and "527 group" are, by law, independent of the Obama campaign, and donations to either entity are separate from the $2,300 limit on direct donations to Obama's primary or general election campaigns. Contributions to the PAC are capped by law at $5,000 per individual. The non-PAC "527 group" does not have contribution limits but is barred by law from expressly advocating for the victory or defeat of a federal candidate such as Obama. The "527 group" has reportedly stated that it will use its money "to support local candidates 'inspired by Obama' and for voter-registration efforts." Therefore, the Chronicle's claim that donations to Vote Hope -- either the PAC or the "527 group" -- "exce[ed] ... what is allowed under tough federal campaign finance laws" is false.

The article also claimed that Vote Hope is "[e]xploiting a legal loophole" and that it has "set up a so-called 527 group -- an unregulated committee of the type deployed by Republican Swift Boat Veterans in the 2004 presidential campaign. The article does not explain how Vote Hope constitutes the exploitation of a "legal loophole," given the contribution restrictions to which the PAC is subject and given the requirement that both the PAC and the non-PAC "527 group" be completely independent of the Obama campaign. Indeed, Williams' characterization of the "527 group" as "unregulated" is also inaccurate, given the legal restrictions on its activities. A June 22 MSNBC.com article cited Vote Hope founder Steve Phillips on the differences between the two groups:

Phillips claims Vote Hope is going to keep the money it raises as a 527 separate from the money it raises as a PAC. Only the PAC money, he said, will be used in direct support of Obama for TV ads and get-out-the-vote efforts. On the other hand, the 527 money will be used to support local candidates "inspired by Obama" and for voter-registration efforts.

According to the Chronicle article:

California supporters of Democratic presidential candidate Sen. Barack Obama are using a controversial political committee to rake in donations in excess of what is allowed under tough federal campaign finance laws.

Exploiting a legal loophole, the Obama supporters have set up a so-called 527 group -- an unregulated committee of the type deployed by Republican Swift Boat Veterans in the 2004 presidential campaign -- as a centerpiece of political fundraising for the California Democratic primary in February.

So far, wealthy donors have written checks in the amounts of $90,000 and $50,000 to "Vote Hope 2008," the Obama supporters' 527 group, federal records show. The group is led by San Francisco lawyer Steve Phillips, son-in-law of wealthy financier and Democratic political donor Herbert Sandler.

Named for the section of the U.S. tax code that regulates these groups -- and independent of the input or control of political candidates -- 527 groups aren't subject to the Federal Election Commission's legal limit on contributions of $2,300 per donor per election.

[...]

None of Obama's rivals is believed to have set up fundraising mechanisms similar to Vote Hope, according to experts who have reviewed 527 committee filings at the Internal Revenue Service.

By law, Obama himself cannot have anything to do with either the Vote Hope PAC or the 527. His campaign couldn't be reached Tuesday for comment on the Vote Hope effort.

The political action committee is allowed by law to electioneer for Obama. The 527 group cannot expressly advocate Obama's election, but it can pay for voter outreach. As the example of the Swift Boat Veterans shows, a 527 group can also finance attack ads against a preferred candidates' opponents if they are framed as oriented toward an issue. Some believe the barrage of anti-Kerry advertising financed by the Swift Boat Veterans helped secure President Bush's re-election.

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